Ex-chiefs have earful for candidates, sharp words for FCC

Former FCC chairmen Michael Powell and William Kennard served up frank advice …

Michael Powell and William Kennard, former chairs of the Federal Communications Commission under presidents George W. Bush and Bill Clinton, respectively, spoke candidly about their experiences heading the regulatory agency at a National Press Club event Tuesday. Held by the Information Economy Project at George Mason University, the forum was meant to provide frank advice on telecom policy to presidential hopefuls John McCain and Barack Obama—but also gave the ex-chairmen a chance to offer some surprisingly harsh words for their erstwhile agency's record, on issues as diverse as indecency and antitrust regulation.

Much of the sharpest criticism at the event came from Powell, who chaired the agency from 2001–2005 and now serves as a top technology adviser to John McCain. Parceling out blame to Congress and the FCC in equal measure, Powell said that the agency's regulation of broadcast indecency has "gone way too far—we are dancing with the limits of the Constitution."

Bono's f-bomb

Powell pointed a finger at himself as well, recalling the agency's decision to reverse its own ruling on whether singer Bono's use of an expletive at the 2003 Golden Globe awards was "indecent." Upon accepting an award, the sunglasses-sporting U2 front man had declared "This is really, really [effing] brilliant." Initially the FCC had determined that the use of the f-word in context was merely emphatic, but facing intense pressure and ridicule from legislators, parents groups, and the press, "the FCC blinked." "It was a terrible mistake," said Powell, "and I voted for it." If Bono's exclamation was "indecent," Powell opined, then the agency had in effect adopted a strict-liability rule, leaving "no rational principle" for distinguishing "indecent" from innocent expletives, with the result that enforcement "becomes terribly political."

Some of the fault, the ex-chairman argued, lay with the Supreme Court, which "has not taken a meaningful case in this area in a long time," despite the fact that "technology has changed immeasurably" since such seminal rulings as the 1978 "Seven Dirty Words" case involving the late George Carlin. And he ridiculed the legal distinction between "pervasive" over-the-air broadcasts and more protected media like cable and the Internet. "My kids have no idea what a 'broadcast channel' is, said Powell. "The idea that the First Amendment changes as you go up the dial is silly."

In the modern media environment, Powell suggested, cracking down on broadcast indecency only gave "false comfort" to parents, by implying that "armies of lawyers" would filter content for them. Rather, he argued, the outrage and pressure the FCC faced in the Bono case, and later in the wake of Janet Jackson's Super Bowl "wardrobe malfunction," proved that parents themselves were more than capable of penalizing broadcasters who aired inappropriate content during family programming.

Criticism of merger oversight

Powell was equally acerbic on the subject of the agency's merger review process, which he suggested added little of value to the ordinary antitrust review conducted by the Department of Justice. He especially blasted the practice of imposing "voluntary conditions" on mergers, saying it had become an abusive means of exercising authority well outside the scope of the agency's legitimate regulatory powers. By implicitly threatening to block a deal, he argued, the agency could extract "bennies" from regulated firms that bore little relation to legitimate regulatory concerns—with the nominally "voluntary" nature of the concessions foreclosing any hope of appeal. "These things take 14 months not because of any analytical merger review," said Powell. "They take 14 months because there's a horse trade... Why isn't that just extortion?"

He also noted ("lest I sound like a hack for industry") that such rules were often a cop-out mechanism by which the agency could shirk an often politically uncomfortable responsibility to block bad mergers. "Don't dress it up, shoot it!" Powell enjoined commissioners. "If you're really convinced this harms consumers, don't let them keep harming them as long as they do something nice over here."

The FCC, Powell insisted, should not be in the business of "writing business models," which he called "a terrible direction, an arrogant direction" for the agency to take. "This is the FCC," Powell quipped, "that was sure the spectrum now called WiFi was junk—spectrum for baby monitors and microwaves."

The D Block debacle

As one example of that arrogance, Powell cited the agency's attempted D Block spectrum auction, characterizing its failure as "infinitely predictable." In an implicit dig at Democratic commissioners, Powell blasted the policy of "government by press release;" he said had shaped the decision to impose burdensome public interest requirements on the 10MHz block of spectrum. No bidder offered anything close to the $1.3 billion reserve set for the D block, whose owner would have been obliged to share it with a national public safety broadband network. "People think they can make firms behave in uneconomical ways if they're loud enough," said Powell, who implied commissioners had let the desire to "take a stand" override practical considerations.

Toward a national broadband policy

One of the chief tech policy distinctions between John McCain and Barack Obama has been the latter's support for Net Neutrality, which Powell joins McCain in opposing. Noting that he was "the first government official to talk about the 'four freedoms,'" Powell nevertheless worried that he'd heard "20 different interpretations" of what precisely "neutrality" would mean, and doubted legislators were equipped to close the gap between a vague ideal and an effective, detailed policy. It would be foolish, he said, to start "legislating architecture" until it was clear that any genuine problems that arose could not be dealt with under existing rules. Neutrality, he warned, "could be the creeping beginning of extending telecom regulatory principles" to the Internet. (Kennard acknowledged that he and Powell had "common ground on ends, if not means," but doubted that the ad hoc, remedial approach favored by Republicans would be adequate.)

On the question of a national broadband policy, Powell said that most of the potential approaches that have been laid out can be reduced to the idea that people "expect government to write a big check." In the current economic climate, he mocked the idea that there would be any political will in Congress to shell out billions annually rolling out rural fiber, though he added that he would "be one of the first to support such a thing if I thought it were politically feasible."

Despite that, Powell encouraged his successors to develop a broad strategic plan that went beyond the annual budget. "Here's the way the world sucks when you're FCC chairman, said Powell, "80 percent of what you do, you have to do or have to respond to. Another few percent are things that fall out of the sky." The mark of a successful chairman, he said, was the use of the small remaining discretionary space to drive innovation. He lamented, for example, that "80 percent of the spectrum is not being used 80 percent of the time," and said the agency had not been aggressive enough in "insisting spectrum owners use what they have" or exploring the possibilities of shared and unlicensed spectrum.

In the future, he said, legislators and commissioners need to begin viewing telecommunications infrastructure less as a discrete public utility, and more as a tool that permeates all spheres of life—and of regulatory responsibility. "It is shocking to me that the power company doesn't know when your power is out," said Powell, but noted that the solution—smart grids—involved superimposing a telecom network on a power network, implicating two areas normally handled by different agencies operating under different rules.

Kennard's take

William Kennard, who headed the agency from 1997–2001, focused more in his remarks on the internal politics and procedures of the FCC. "This is an agency that has been demoralized," he said, by political appointees (it's hard to imagine who he could mean other than current chair Kevin Martin) who treated FCC career staff, the "heart and soul" of agency, as "cannon fodder"—servants to be worked to the bone at best, and at worst, potential troublemakers with their own agendas. In the early days of the Internet, he recalled, the FCC was the "hot place" to work, but no longer.

The FCC appointment process has become more politicized, Kennard argued, ever since Clinton and former Senate Majority Leader Trent Lott struck a deal to let Republicans pick agency boards. The result, he said, was that instead of being staffed like a management team, with commissioners chosen for complementary expertise to produce a board that works well together, party leaders would be afforded their patronage picks. (Powell suggested that the solution might simply be to eliminate the practice of assigning board positions by party, which requires a perpetual 3-2 split.)

Decision-making has become more predictable, said Kennard, as the views of commissioners now tend to reflect those of their patrons on Capitol Hill. As a result, policy-making had also become more contentious and partisan. In other words, we shouldn't expect to see the friendly exchange of views that characterized this forum at the FCC any time soon.